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OCIE Publishes Risk Alert Regarding COVID-19-Related Compliance Risks and Considerations

Client memorandum | August 13, 2020

On August 12, 2020, the Office of Compliance Inspections and Examinations (“OCIE”) of the Securities and Exchange Commission (“SEC”) published a risk alert (“Risk Alert”) identifying a number of COVID-19-related issues relevant to SEC-registered investment advisers and broker-dealers (collectively, “Firms”). OCIE had previously announced that it was actively engaged in ongoing outreach and having discussions with Firms to assess the impacts of COVID-19 on their businesses, including challenges to operational resiliency and the effectiveness of Firms’ business continuity plans. The Risk Alert outlines risks and practices that OCIE identified through its industry outreach, as well as consultation and coordination with other regulators. OCIE’s observations and recommendations fall into the following broad categories: (1) protection of investors’ assets, (2) supervision of personnel, (3) practices relating to fees, expenses, and financial transactions, (4) investment fraud, (5) business continuity, and (6) the protection of investor and other sensitive information. We summarize these below.

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